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Market attention turned to secondary performance this week as borrowers and investors prepare for the release of Q3 bank earnings next week.

Just $13.6bn of US IG debt priced this week, and while new issue concessions were low with strong demand, follow-on trading weakened in the back half of the week with bond spreads moving on average 1.3bps wider, according to a note from R. Seelaus.

Beauty company Coty is the only corporate new issue that traded positively on the week after pricing $900m SUNs due 2031 at 187.5bps over Treasuries that tightened to around 181bps over by this morning. Likewise, financial issuers such as Goldman Sachs PCC, Rabobank and TD tightened on the week.

But others such as T-Mobile, which priced a $2.8bn three-part deal on Monday, saw spreads move 4bps-6bps wider on the week.

Building materials company CRH similarly priced a $2.5bn three-part deal that was viewed largely as acquisition financing for the company’s buyout of Eco Material Technologies, as we wrote about this week. The three tranches traded well on the break but have since widened out by 1bps-2bps from their original spread.

But the biggest drag on the week was the Blackstone Secured Lending Fund, which saw its $500m SUNs due 2031 trade some 16bps wider on a spread basis.

The business development company (BDC) primarily invests in secured debt from private US companies — and while it is not explicitly tied up in the First Brands bankruptcy that is shaking the world of private credit (check out all of 9fin’s coverage here) — investors say they are worried about how other players in the space might be impacted.

“First Brands is a larger example of private credit not being able to track this stuff and not having visibility into off balance sheet debt, and it sort of puts a bit of fear into the market where people are asking are there broader implications? Are there other First Brands out there?” the portfolio manager said. “People are trying to extrapolate and think is this a watershed moment and what's going on in middle market lending, particularly with BDCs?”

Banks ahoy

Next week should be dominated by bank supply, but just how much paper will the banks price?

Earlier this week we delved into why bank issuance could surprise to the upside given that spreads are very tight and banks may look to prefund some of their funding needs — especially the regionals such as Fifth Third that have new M&A funding needs.

However, most buysiders are expecting that lower regulatory holding needs will keep deal flow muted in a shorted holiday week for Indigenous People’s Day.

“Issuance will be relatively light going into the end of the year given the regulatory reform and that there's just not much of a funding need for financial issuers,” one analyst said. “Issuers are not in a real rush to come to the market. They have fulfilled most of their funding needs for the year.”

Last year FIG borrowers priced some $22.5bn in that first week post-Q3 bank earnings, according to 9fin data, and the market is expecting similar volumes or even lower next week.

Corporate borrowers are still in blackouts and will start reporting in the coming weeks. Investors said the main area of focus will be on tariffs and how much of the costs companies are willing to absorb or if they’ll pass costs on to consumers and/or layoff some employees to keep margins under control.

“I think the big unknown is does the labor market hold up? Because that's what the Fed is reacting to,” one buysider said. “What leaves me encouraged as a credit person, are those Q2 earnings, which were overwhelmingly positive. If you see similar momentum in Q3 numbers it's hard to think that the market gets overly bearish.”

As a side note, the Government is still shutdown for a second week, but credit markets are looking past it. As one source put it, “I don’t give a monkey about that.”